Nike Break the CrossFit Market

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WE CAN’T STOP YOU DON’T STOP JUST DO IT

BoF - 3 Nike Retail Concept

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Niccolo’ Biagini

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WE CAN’T STOP YOU DON’T STOP JUST DO IT

BoF - 3 Nike Retail Concept

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Niccolo’ Biagini

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INDEX VOCABULARY

10-11

BRAND

12-23

HISTORY

14-15

ICONIC TRAITS

16-17

COMMUNICATION

18-23

CORPORATE

24-29

GLOBAL REVENUE

26-27

MANUFACTURING

28-29

MARKETING

30-35

BUSINESS MODEL (NOW)

32-33

BRAND PRISM

34

SWOT ANALYSIS

35

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MARKET STUDY

36-43

GENERAL POSITIONING

38-39

RUNNING

40

BASKETBALL

41

TENNIS

42

GOLF

43

FUTURE OF SPORTS

44-51

TREND RESEARCH

46-47

CROSSFIT

48-51

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IDEA DEVELOPMENT

52-63

NEW BUSINESS MODEL

54-55

CLIENT

56-57

MOODBOARD

58-61

U/O + TECH.

62-63

COMPETITION

64-73

UNSATURATED MARKET

66-67

BENCHMARKS

68-73

THE COLLECTION

74-81

MERCHANDISING

76-79

CAPSULE

80-81

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THE BOX

82-99

IDEA

84-85

LAUNCH

86-87

CUSTOMER JOURNEY

88-89

LOCATION

90-91

3D MODEL

92-95

BUDGETTING

96-99

CONCLUSION

100-101

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VOCABULARY

W.O.D: The “WOD” is the “workout of the day.” Each day a new WOD is posted online by Crossfit.com and it’s part of a complete program designed to improve strength and conditioning. The WOD can be scaled (adjusted) to provide a suitable challenge for athletes at any level.

KETTLEBELL: The kettlebell or girya is a cast-iron or cast steel weight (resembling a cannonball with a handle) used to perform functional that combine cardiovascular, strength and flexibility training. It is one of the main tools the CrossFitter uses for his daily workouts.

BOX: refers to the gym, room, location where a group of Crossfitters come together to do exercises and do their WODs. Often owned by a private coach or a comapny. To be a recognised box by CrossFit Inc. it has to be affiliated, otherwise it can not carry the title“crossfit box”.

POOD: A pood is a Russian unit of measurement used for kettlebells. Common conversions: 1 pood = 36 lb.; 1.5 pood = 54 lb.; 2 pood = 72 lb.

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Compression Garment: Compression garments are pieces of clothing, such as socks, pantyhose, sleeves, etc., that provide support that is especially useful for people who have to stand for long periods, or people with poor circulation. Compression sportswear is also worn by some athletes during exercise to imrpove blood flow, and post-exercise to ease muscle stiffness and quicken recovery time. Tabata: To do as many repetitions of the assigned exercise as you can within 20 seconds, then rest for 10 seconds and repeat the pattern for seven more times.. The score is the least number of repetitions scored in any of the intervals.

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Burpee: The burpee, or squat thrust, is a full body exercise used in strength training and as an aerobic exercise. The basic movement is performed in four steps and known as a “four-count burpee�: Begin in a standing position. Drop into a squat position with your hands on the ground. (count 1) Kick your feet back, while keeping your arms extended. (count 2) Immediately return your feet to the squat position. (count 3) Jump up from the squat position (count 4)

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BRAND

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HISTORY Nike was founded in 1964 under the name “Blue ribbon Sports”, and was initially operating as a distributor for Japanese shoemaker Onitsuka Tiger (Asics). It is only 7 years later that it was officially re-founded as Nike Inc. Created by Bill Bowerman, a track-and-field coach, and Phil Knight, a middle-distance runner from Portland, enrolled at the university of Oregon. Up until today the headquarters are still in Oregon. The first Nike shoes are characterised by the waffle sole. This idea came to Bowerman in 1971, and gave life to the “Nike waffle trainer” and launched the company as a manufacturer of innovative enhancing footwear. Nike’s logo and iconic symbol is the “swoosh”, which was designed by a Portland university student who was later gifted a percentage of stock worth of 640.000$.

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Nike is renown worldwide for its famous “Just Do It” campaigns, and in general, always tend to push “the normal guy” to go beyond himself and never underestimate ones limits. Even though they have always picked the best of the best athletes in any category of sport to be their ambassadors, they are trying to create their usual publicity around the common man, around the fact that everyone, living in his own micro-cosmos, can be a winner, as long as he doesn’t put limits to himself. Very iconic and famous is the ad campaign citing “If you have a body, You are an Athlete” Generally Nike is recognised today as a producer of the best performing, most reliable sports gear worldwide, and with around 1771 stores worldwide it is officially the biggest sportswear retailer with around 60% of the market share, worldwide.

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ICONIC TRAITS One of the most important iconic traits of Nike are its multiple personalities. Nike names its shoes after a rigorously selected group of athletes: Air ”Jordan”, Air “Penny”, Air “Swoopes”,”Tiger Wood” line, Hurley and soon, a CrossFit Line. Jordan’s “star power” vaulted Nike to the top of the athletic footwear industry and sports industry in general. But, there are lesser gods in Nike’s stable – each with their own distinct abilities and personalities, each with their own market niche. Phil Knight, cofounder of Nike, understood that brand value is not just about a product but a sign, so he understood the connections between Nike’s representations of athletes tied fans and the consumption of its products. Just the way fans aspire to the heroes of their game, Knight reasoned that great products used by great athletic figures, could create customers who were just like fans.

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“Nobody roots for a product”, it is Nike’s goal to associate its product with the “Hero that is rooted for”. The representation of the athlete (both personality and performance) is attached to a particular product. Each athlete acts as a carrier of a certain personality and performance trait that is joined to a particular shoe. Nike’s success with its sign, the swoosh, has been rooted in its ability to stake itself better than any other marketer to themes of authenticity. Even though in some cases it even desecrates its own logo, which has given its voice credibility, and makes it likable because nothing seems sacred to Nike, not even its biggest iconiser – the swoosh sign. Ever since its foundation, Nike can be mostly recognised for its extreme investments in research and development. They want to always be able to find authenticity, both in their communication and in their product offer. They are on the forefront of

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technological innovation regarding sportswear in general and want to keep it that way. While experimenting constantly with fabrics and different materials, they have also been able to link their sports gear, equipment and footwear, with the use of extreme colours. Colour palettes filled with all kinds of bright fluos, from blue to green, to purple and yellow have come to characterise and identify Nike in a way which is incomparable to any other sports brand. In fact ever since Nike has started this trend, many sportswear manufacturers have been trying to incorporate a similar aesthetic within their product. This comes to show that Nike is the real market leader. The strength of Nike is in the fact that it was able to convey this use of colour to the customer in a way that it became a strong visual identifier of the brand, its quality and values. Whenever you are in a sportswear store and you see bright fluo colours, you immediately think “NIKE�.

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COMMUNICATION How they do it Nike is using one of the most successful advertising strategies: it promotes its products signing sponsorship contracts with professional sportsmen, celebrities, and college athletic teams. The first Nike TV add was launched in 1982, created by a pioneer agency (Wieden + Kennedy), while the NY Marathon was being broad casted. Their advertisements became better and better as time went by, and they were named Advertiser of the year event two times (1994 and 2003). The honor was given by the Cannes Advertising Festival, and Nike is the first company to have been awarded with it twice. Nike is also a double winner of the Emmy Award for the best commercial. The company was among the first Internet marketers using emailing to promote its products, and using narrow cast communication methods to develop their campaign and to boast sales.

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Sponsorship Nike has many famous athletes as its sponsors, this being their most powerful tactic for selling and promoting unique design and production technology. The first professional athlete to become Nike’s sponsor was Romanian tennis player Ilie Nastase. There are many other field/track athletes who worked with Nike during the years, as for instance Carl Lewis, Sebastian Coe, and Jackie Joyner-Kersee. The fact that NBA’s star Michael Jordan signed the same contract in 1984 was critical for both the company’s and the player’s career and it boosted Nike’s publicity like never before. What is known by almost everybody in the world is that Nike sponsors famous football players, working tightly with names such as Cristiano Ronaldo, Ronaldinho, and Neymar. It also has significant presence in golf, first with Tiger woods and now with world champion Rory McIllroy.

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EMOTION Emotional branding Nike brand strategy is to build a powerful brand – so powerful that it inspires fervent customer loyalty from people literally all over the world. This is because Nike advertising uses the emotional branding technique of archetypes in its advertising – more specifically, the story of the Hero. It’s an age old tale, a tale of a hero pitted against a great foe, and after a great struggle, emerging triumphant. You could say that Nike’s marketing strategy is thousands of years old, and has been inspiring customer loyalty the entire time.

Loyalty with heroism Nike advertising isn’t the only group that uses the Hero archetype to inspire customer loyalty. Many other companies use this emotional branding technique to great effect. In most cases, the foe is external. The most common story of the hero is that of a man of humble origins setting out to defeat a great evil – one far more powerful than he – and, against all odds, emerging triumphant. As long as there is a clearly identified enemy and a clearly identified hero, the emotional branding can begin.

Brand strategy

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Nike advertising takes the common hero story and turns it on its head. Instead of inspiring customer loyalty by singling out an external enemy, it pulls out the stops and focuses on an internal foe – our laziness. Every morning when that alarm goes off and it’s still totally dark outside, the battle begins. When we choose how long to run, the battle continues. This is how Nike marketing uses emotional marketing to inspire customer loyalty. They know that while some people may identify with an external foe, all people identify with an internal one. Nike brand strategy is excellent on this end because not only is the internal foe someone we can all hate, the hero is the viewer! In one way or another, we are all the hero of our own story, and Nike marketing has long since identified that feeling – and used it to inspire timeless customer loyalty

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CORPORATE

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The #1 source of earnings for revenue is their footwear category which accounts for about 55% of total revenue. Nike is #1 for athletic footwear in the entire US, leading their competition by a wide margin. Their main focus is to always think in terms of separating and differentiating themselves from other rival footwear brands. Furthermore, considering soccer footwear, it is the #1 brand on an almost global scale, including even Germany, the home of their biggest rival Adidas. The #2 source of earnings is their apparel. Their strong, constant apparel innovation gives them a lot of pricing power. Their apparel revenues account for about 29% of total Nike Revenues, which is about €10 Billion in F.Y. 2014.

The equipment category accounts for about €1,6 billion euro, with a negative growth of -2% compared to F.Y. 2014. This negative growth is probably due to the fact that in 2014 there was the world cup which surely had a huge impact on equipment revenues and also other categories. This negative growth is due mainly to negative growth in Japan, where it accounted 18% less than 2014. Western Europe slightly compensated, having a growth of10%. Overall Revenues for Nike, Inc. grew by about 10% throughout fiscal year 2015, accounting for €30,6 billion in total revenues. This total divided up in: €18,3 billion by footwear, €8,6 billion by Apparel, €1,6 billion by equipment and finally €2 billion by Converse.

GLOBAL REVENUE

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MARKET GROWTH The US is without a doubt the biggest market for Nike, Inc. but following very closely there is Western Europe, which accounts for about 19% of total revenue up from 16,5% in 2012. The entire area has seen a very steady growth over the last 5 years. Nike has been targeting the biggest economies in Western Europe such as UK, France, Germany and Switzerland, looking mostly at running, soccer and women’s training to drive growths. In terms of emerging markets, Nike is hoping to push its revenues to grow to €6 billion by F.Y. 2017. They are hoping to achieve this by pushing on Brazil, which is expected to become their third biggest market globally in time for the Olympic Games in Rio of 2016. That said, the larger Latin American economies of Argentina and Brazil have undergone significant

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currency depreciation in recent years, these slowing and negative economic growth are big challenges Nike has to face. Central and Eastern Europe and Japan are two smaller segments, accounting for 4.9% and 2% of total revenues, respectively. Even though the Nike brand is well received by the youth culture in both geographies, Central and Eastern Europe revenues have experienced modest growth, while Japan’s revenues have declined during the period between fiscal years 2010 and 2014. China is an ever increasing market, and the Nike product is very much appreciated by the target customer. The F.Y. 2015 has seen a growth of about 26% in the footwear category, while the apparel’s growth was at 6% as per compared to F.Y. 14.

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DISTRIBUTION The Nike brand experience stores provide customers with the full bricks-and-mortar retail proposition. It has premium stores that offer the consumer the best brand experience, concept stores such as Nike Town, the largest stores in the fleet. Each Nike Town features six or seven Nike brand categories, providing the best product and services those categories can offer. This premium customer experience gives Nike higher pricing possibility on the products offered. They also have stores which are all about creating sport specific experiences, which give an athlete exactly what he is looking for, both product and service wise. Along with its wholesale partners, Nike aims to create unique experiences such as the House of Hoops for

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Basketball with Foot Locker, or the Nike Track Club for runners with Finish Line. These product differentiation strategies allow for premium pricing. Nike’s Distribution Centers Nike has five primary distribution centers in the US located in Tennessee, three of which operate on a leased basis. This accounts for about 1/4th of the total number of distribution centers with which Nike operates. In fact the company had 16 distribution centers outside the US at the end of F.Y. 2014. Considering the US, Nike apparel and equipment products, together with all the products from Hurley and Converse are all shipped from the distribution centers in California.

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Nike is one of the pioneers of the industry-defining manufacturing outsourcing strategy. It’s now exploring innovative ways of manufacturing so it can customize products on an unprecedented scale. Footwear manufacturers Nike’s footwear is manufactured outside the US by independent manufacturers that often operate multiple factories. In F.Y. 2014, the company was supplied by ~150 footwear factories in 14 countries. Factories in Vietnam, China, and Indonesia respectively manufactured approximately 43%, 28%, and 25% of total Nike’s footwear. The largest single footwear factory accounted for ~5% of total Nike footwear production.

Apparel manufacturers Like footwear, all of Nike’s apparel is manufactured outside the US by independent contract manufacturers. In fiscal year 2014, Nike was supplied by around 430 apparel factories operating in 41 different countries. Their huge manufacturing network consists of factories within China, Vietnam, Thailand, Indonesia, Sri Lanka, Pakistan, and Malaysia. Together, these accounted for the biggest part of the apparel production. The top five apparel contract manufacturers together accounted for around 34% of Nike’s total apparel production. The most important manufacturer of Nike Apparel accounted for about 10% of the total apparel production.

MANUFACTURING

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MARKETING

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BUSINESS MODEL OVEREXPOSED PERFORMER

SOCCER RUNNING ATHLETICS LIFESTYLE DAY/NIGHT ...

DIFFERENT TECH/SPORT

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Nike’s client is always looking for the best performance possible, or at least creates the illusion of performance and athleticism to others. The client is overexposed in the sense that Nike and its Competitors are bombarding the client with new product with different functionalities to a point that the market is over-saturated. Nike is the Top sportswear brand Worldwide. They supply their customers with garments and sports gear for almost every occasion, and have an exaggeratedly huge collection assortment. Day or night, sports or lifestyle, any Performer or poser can find whatever he needs at Nike.

Nike commits huge investments into Research & Development in order to always keep a certain authenticity and at the same time, be on the front line of technical innovation regarding its footwear or apparel. Every sport has its own technical specification and dedication in the products.

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PRISM

The identity of the Nike Swoosh, the brand and its heavily coloured product is extremely strong. They push performance through revolutionary innovations, always looking to create a winner. They dress both Athletes, fashionistas and even sports posers.

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Nike pushes the idea that any man with a body, can be an athlete, as long as he strives for winning over himself, before others. Clients either buy this mentality, or they leave it, but the connection with the brand, is very strong and difficult to be broken.

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SWOT

Strength 40% sportswear market = Nike Leader Research & Development Reference for EVERY Athlete Overexposure Lifestyle <->Performance (Credibility loss)

Weakness

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Opportunities Find an Unsaturated Gap Expand Lifestyle - big potential market

Diluition of Brand Equity (overexposure) Lose authenticity ----> Lose Loyal Client

Threats

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MARKET STUDY

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POSITIONING High Price

Performance

Lifestyle

Low Price

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Nike’s company organisation, allows it to be present on all platforms, providing products with extremely high performance, for higher prices, and garments which are cheaper but present more iconic reference points, for a more accessible price. This causes Nike to literally be at the centre of the market, compared to other brands, who have a more clear path on which they are working. Brands like Asics, for running, and Reebok, for CrossFit and Yoga, tend to be more focused on performance, while Adidas is being more and more associated with lifestyle, because of all its collaborations. Nike on the other hand, is present in every corner, because it is doing collaborations with important fashion designers (Ricardo Tisci), but at the same time is also expanding its sports brands market by purchasing brands such as Hurley, renown American Surf brand. This is the reason why Nike finds itself in the centre when making a general map concerning the global company.

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RUNNING High Price

Fashionable

-“Running� is going through a 2-year long decline in popularity and is being practiced slightly less. Both professionally and non. -It is considered to be great in combination with Yoga, which on the opposite is going through a big increase in popularity !

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Performance

Low Price

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BASKETBALL High Price

SHAQ

Low performance

-Worldwide renown Stephen Curry, sponsored by Under Armor, has put all the eyes on the NBA (social network and tv channels) -NBA and CHINA big markets – FIBA (Europe) still needs growth -Growing industry all over the world – 2nd sport globally

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Performance

- Huge growth of the basketball industry which has started ever since 2012 - More views and searches worldwide - The most practiced sport or aspired sport for youngsters 14-18 in 2014

Low Price

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TENNIS High Price

Low Performance

Tennis, has been increasingly popular for youngsters and is seeing a positive growth trend in participation of about 4%. It has reached the highest level of participation since 2009, because it had gone through a small period of crisis. Tennis TV is watched 13% compared to 2014

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High Performance

Low Price

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GOLF High price

Low Performance

High Performance

Low price

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Golf has a negative growth trend ever since 2008, some studies believe that this is due to the financial crisis, but many others feel the problem is elsewhere. Even though as a sport it has great potential, it has been losing many fans and is becoming less popular, on a global scale.

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FUTURE OF SPORTS

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TREND IN THE MARKET The 2015 ACSM Worldwide Survey of Fitness Trends, has established that one of the biggest growing trends in the past years, has been bodyweight training. Even though it popped up in the ranking only in 2013, it has now seen a massive growth in the last couple of years and is now the most important workout on trend in the fitness world. This growth in popularity, is due to the fact that it is a very natural way of working out. It is a type of training which is very good for the body, and allows the body to grow in a natural, proportional way. It is also much less expensive because many of its exercises require less or no weights. Bodyweight training’s growth is mainly due to the exponential growth of CrossFit, which has become relevant since around 2012.

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CrossFit includes exercises that mainly focus on using the bodyweight and doing other exercises at highintensity. CrossFit has been mainly sponsored and followed up by Reebok, which is owning basically the whole market, providing specific gear for this type of workout. Many Cross-fitters have been waiting anxiously for Nike to enter in this market, but so far, have been disappointed because Nike has not made this step. The statistics regarding CrossFit are astonishing: In 2014 just fewer than 210,000 people competed in the CrossFit Open, up from 138,000 people in 2013, up from just fewer than 70,000 in 2012 and that was up from just over 26,000 in 2011. In 2010 there were 13 affiliates and today there are around 9000.

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2011: 25.000 Professional Crossfitters -2014: 210.000 Professional Crossfitters

2010: 13 affiliated gyms -2015: 11,000 affiliated gyms

Bodyweight training biggest 2015 trend in fitness Worldwide

CROSSFIT

“Nike CrossFit” searches on google:

NO PRODUCT on website or in store!

2005

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2007

2009

2011

2013

2015

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CROSSFIT CrossFit is a fitness regimen developed by Greg Glassman, CrossFit’s Founder and CEO. He created a program specifically designed to improve fitness and health. CrossFit is constantly varied functional movements performed at relatively high intensity. All CrossFit workouts are based on functional movements, which reflect the best aspects of gymnastics, weightlifting, running, rowing and more. These are the core movements of life. They move the largest loads the longest distances, so they are ideal for maximizing the amount of work done in the shortest time. Intensity is essential for results and is measurable as work divided by time. The more work you do in less time, or the higher the power output, the more intense the effort. By employing a constantly varied approach to training, functional movements and intensity lead to dramatic gains in fitness.

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These workouts are done in group by different people, creating a true community, a key component of CrossFit. Over the years, the community has grown exponentially giving birth to a global network of 11,000 CrossFit affiliates worldwide. Harnessing the natural camaraderie, competition and fun of sport or game yields an intensity that cannot be matched by other means. The CrossFit program is driven by data. Using white boards as scoreboards, keeping accurate scores and records, by running a clock, creates an unprecedented charge of motivation in every individual. This data has important value well beyond motivation. A CrossFit program prepares trainees for any physical contingency—not only for the unknown but for the unknowable, too. The specialty of CrossFit is not specializing but preparing the unprepareable.

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IDEA DEVELOPMENT

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NEW BUSINESS MODEL UNDEREXPOSED PERFORMER

W.O.D. OPEN GAMES PRO GAMES

HIGH P. CASUAL P.

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A performer who practices an uncommon sport that is not widely communicated. He is provided with his specific sportswear by very few brands and could use personal guidance in choosing his sportswear. A client that cares a lot about his body and follows the CrossFit regimen, in order to better his body and mind.

The client is looking for sportswear to use either for his general W.O.D. (workout of the day) or also for professional use in the Open Games (Beginners) or the Pro Games. He is looking for specific performance gear that can enhance singular or general traits.

The technology that Nike will provide, will be a variety between high performance, for those looking to participate in tournaments and high level competitions, and also casual performance for those needing the product only for personal workouts or hobbies.

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CLIENT Underexposed

Performer

The Nike CrossFit client, as opposed to the Nike client in general, is extremely underexposed, he is part of a community, a group, which comes together in The Box but is quite alienated from other sports. At least for now they are not on the same line with other sports, they try to differentiate themselves, and workout in separate gyms, focusing more on group workouts, in team. The sense of community, group, team is extremely important for Cross-fitters, even though it is ultimately all about perfecting your body on all different levels.

The Nike CrossFit client is a performer, constantly looking to better himself in every aspect of his body: Speed, Endurance, Strength, Power, Agility. Therefore he is looking for the perfect gear that can satisfy his every need, a shoe which helps him with lifting, a trouser which helps blood flow - Oxygen transportation - Endurance. With CrossFit being a sport that asks so much of your body on a very global scale, the Nike Cross-fitter cares a lot about his body’s wellbeing and is always aiming at getting to the next level, beat his own limits.

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Sustainable

Self-Made

The Nike CrossFit client cares about sustaining his body and having a healthy workout. CrossFit is bodyweight training, the most natural and healthy way of exercising the body, using only its weight and natural movements. Mixed with a regime of food diets (the highest % of diets by Gym-goers is done by Cross-fitters) creates a client who cares a lot about himself and nature. This is in sync with Nike’s idea of communication (everyone can be a champion in his own micro-cosmos) and the fact that they have been pushing their sustainability factor.

Crossfitting is a sport where it is all about limits, and slowly pushing them further and further. Starting from nothing, it is all about becoming better and better and improving yourself slowly, over long periods. This is a huge satisfaction for those who do not give up, and this creates a Self-Made client. Only through hard effort can they reach certain goals. In this search for perfection and bettering themselves, they are accompanied by Nike, who provides them with the perfect gear to complete those areas where one might be lacking. Finally achieving greatness.

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U/O Nike wants to provide the client with the possibility to find exactly the sportswear that he is looking for. The uses and occasions can vary: When a client is looking for a pair of shoes to start doing CrossFit to better his fitness and health, Nike is there. If a person strives for competition and wants to slowly work his way to the top, going from one amatorial tournament to another, Nike is there. Finally, if the Nike performer wants to participate to world championships, or become a professional, Nike would be there.

At the same time, these shoes can also be used for other sports, such as jogging or even by normal gym-goers. Crossfitting includes many different ways of training, going from aerobic movements, to functional movements and even weightlifting, so the uses can vary and therefore also cover different sports and movements. This said, the line is created in order to satisfy specific needs of the CrossFit customer, so all the functional aspects of the shoe are made in order to completely satisfy the needs of a crossfitter.

THE TECH Through our store we want to provide the customer with merchandise which is more focused on performance and enhances specific traits, but also more casual performance, with a more general benefit. By doing so we can try to satisfy all different needs, and like Nike is used to, do so on a wide scale. In order to be on the forefront of technological innovation, performance enhancing materials and tech-fit garments, will be one of the most important aspects of the assortment provided.

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The crossfitter is a client who cares a lot about his body and natural proportions. In order to help with posture, blood flow and comfortability his shoes, and termic garments are very important. By assisting the blood flow, oxygen is transported faster throughout the body and this helps with aerobic exercises, similarly, the posture of an athlete is important in order to keep training regularly, without getting injuries. The Research & Development of Nike can shine and provide the customers with the best product imaginable.

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COMPETITION

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UNSATURATED The CrossFit market is completely unsaturated, with many clients buying regular athletic shoes to do their workouts. The only brand in the whole market which has a relevant CrossFit focused sportswear line is Reebok. Reebok was able to foresee the growth of CrossFit and has marketed itself accordingly, they are the number 1 brand for CrossFit worldwide. The company had been going through moments of negative growth when they decided around 2011 (same moment that CrossFit started growing) to firmly invest in CrossFit and its development, nowadays it is their number one source of income. They have a big array of shoes, with different functions, performance and aesthetic. They have different price points, marking different levels of performance (Amatorial and Professional).

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A part from their line of shoes, they also have a small amount of apparel clothing dedicated specifically to CrossFit. All products have functions that help other capacities. CrossFit, Inc., at the moment, finds in them their most important client: they are the number one sponsor of the “CrossFit Games�, the most important competition of CrossFit all over the world. Reebok is also sponsoring some of the most important and successful athletes of the past years including for example Rich Froning, who was three-time world champion. Nonetheless, Crossfitters from all over the world have been imploring Nike through Online media and forums to make an entrance into the world of CrossFit and many crossfitters are waiting to satisfy their need of Swoosh.

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REEBOK

The only true competitor in the CrossFit market

Interest in “Reebok CrossFit” on Google:

2005

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2007

2009

2011

2013

2015

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Benchmarks General Positioning

Keyword

Price Range

CrossFit Interest

CrossFit Products

Puma

Sport

1

Adidas

Cool

0

Reebok

Training

Complete look

Nike

Performance

1

This benchmark examines different price ranges of Nike and its 3 main competitors, Reebok by default because it is the main CrossFit competitor, and puma and Adidas because they are two big players in the sports industry. It also takes in examination the current interest and engagement towards CrossFit of the brands, talking also about the product offer.

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Adidas as a competitor is going much more towards the fashion and design world, getting more detached from performance and sports. Meanwhile Puma is also undergoing some changes and going more towards design rather than performance and sports but, just like Nike, has put one CrossFit product on the market.

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Benchmarks Use/Occasion of Shoes

Running

Fashion

Sports Diversification

Total Look

Puma Adidas Reebok Nike Only one brand is able to completely adapt itself to different product categories and successfully market itself in different sports segments: Nike. In this benchmark you can see clearly which areas the main competitors are focusing on: As i said before Adidas is going away from sports and going more towards Fashion, while generally trying to

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creating a total look. Reebok on the other hand has a big focus on training and sports in general and very little fashion DNA. Puma finally is going through a phase of re-branding and has currently lost a clear Identity, but is generally pushing more its Fashion appeal. Finally, Nike is the only one successfully present in all fields.

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Benchmarks Distribution

Monobrand

Multibrand

Concept Store

Mass Market

Puma Adidas Reebok Nike

This benchmark focuses on distribution channels and more specifically which channels are used the most by every brand. Both Nike and Adidas are very present in most of the different retail channels, While on the other hand

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Reebok and Puma are distributed mainly through either multi-brand or monobrand stores, while they have a smaller interest, at the moment, in the development of Concept stores. Mass market indicates the general distribution and size of the client base.

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Benchmarks Footwear Pricing

50€ / 90€

90€ / 120€

120€ / 180€

180€ / 300€

Puma Adidas Reebok Nike Footwear is for sports brands one of the biggest sources of turnover, and this is also the case for Nike itself, and its competitors. Here there is a benchmark on the different price points mostly used for pricing sports shoes, and how the different brands saturated these price points. It is clear that Puma has a lower pricing strategy compared to all the competitors, having its biggest

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assortment concentrated between 50 and 90 euro. Adidas has a bigger assortment compared to Reebok, and because of some collaborations, it has also a bigger focus on the higher price points. Reebok is quite balanced, and finally Nike has a saturation which is covering basically all price points. Going from a basic sneaker to a limited edition unique piece, Nike is covering the entire market with a full assortment.

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Benchmarks Advertising

Sponsorship

Fashion Bloggers

Spot

Social Media Campaigns

Puma Adidas Reebok Nike This benchmarks give an overview of which advertisement techniques and channels are used more by the different companies. Nike, Puma, and Adidas all have very important athletes sponsoring the brands because they understood this is an important part of the sports industry. The champion. In general, spots are less

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used but there is instead a focus by all 4 the brands on using social media campaigns, trying to involve the customer and make a more interactive promotion of the brand. Due to the fact that Nike and Adidas are also more assorted in the lifestyle part, they also work with some Fashion bloggers to promote their slightly more commercial and Trendy products.

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THE COLLECTION

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MERCHANDISING The line plan is structured and based on theoretical thinking, the improvement of the previous total looks and sport specialized collections and more. We want to try to give the best seller items in the same colour to create 4 different outfits. The other pieces will be produced to serve the total looks, by integrating them being possible to combine. Someone can integrate his total look with these pieces and make variations of style. Colours are Black, Blue, Orange and Red. The Red and Black are already the two main colours for the

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CrossFit department of our kill-competitor, Blue and Orange instead are the Nike-diversification. These were chosen in order to make people perceive more easily by unconsciously linking it with the product already on the market (red and Black) but at the same time add a new Nike Imprint. We will realise clothing with extra-technical materials, acrylic combined with Polyester, inspired on explosions of strength, like a feeling of colourful power inspired on the color explosion of powder by the artist Marcel Christ.

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LINE PLAN - MAN CODE

ITEMS

MATERIAL COLOURS

SIZES

COST

WP

RP

Lifting shoes

60% EL, 20% PI , 20% TA

1

40-45

9,00€

€ 45,00

€ 195,00

MCSL

Crossfit shoes low

60% EL, 20% PI, 20% TA

2

40-45

8,00€

€ 40,00

€ 140,00

MCSH

Crossfit shoes high

60% EL, 20% PI, 20% TA

2

40-45

8,00€

€ 40,00

€ 170,00

MSAN

Sweater round neck

100% Cotton

2

S – M – L – XL – XXL

10,50€

€ 24,00

€ 82,00

MSVN

Sweater V-neck

100% Cotton

1

S – M – L – XL – XXL

10,50€

€ 24,00

€ 82,00

MTTT

Tank top Tech

80% PC, 20% PI

2

S – M – L – XL – XXL

4,00€

€ 16,00

€ 48,00

MTAN

T-shirt round neck

80% PC, 20% PI

2

S – M – L – XL – XXL

3,50€

€ 14,00

€ 62,00

MTMS

T-shirt mid sleeve V-neck

80% PC, 20% PI

1

S – M – L – XL – XXL

3,50€

€ 14,00

€ 52,00

T-shirt long sleeve Tech

80% PC, 20% PI

1

S – M – L – XL – XXL

3,50€

€ 14,00

€ 72,00

Compression pants Tech

100% PA

3

S–M–L

3,30€

€ 13,00

€ 49,00

MST

Shorts Tech

100% PA

3

S–M–L

3,00€

€ 12,00

€ 56,00

MSP

Sweatpants

100% Cotton

1

S–M–L

5,50€

€ 22,00

€ 96,00

MLS

MTLS MCPT

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LINE PLAN - WOMAN CODE

ITEMS

SIZES

COST

WP

WLS

Lifting Shoes

60% EL 20% PI 20% TA

1

36-41

€ 9,00

€ 45,00

€ 195,00

WCLS

Crossfit Shoes Low

60% EL 20% PI 20% TA

2

36-41

€ 8,00

€ 40,00

€ 140,00

WCSH

Crossfit Shoes High

60% EL 20% PI 20% TA

2

36-41

€ 8,00

€ 40,00

€ 170,00

WSAN

Swaeter Around Neck

100% Cotton

2

S-M-L

€ 10,50

€ 24,00

€ 67,00

WSVN

Sweater V Neck

100% Cotton

1

S-M-L

€ 10,50

€ 24,00

€ 72,00

WTTT

Tank Top Tech

80% PC 20% PI

2

S-M-L

€ 6,00

€ 16,00

€ 38,00

WTAN

T-Shirt Around Neck

80% PC 20% PI

2

S-M-L

€ 5,00

€ 14,00

€ 42,00

WTMS

T-Shirt Mid Sleeve V Neck

80% PC 20% PI

1

S-M-L

€ 5,00

€ 14,00

€ 52,00

WTLS

T-shirt Long Sleeve Tech

80% PC 20% PI

1

S-M-L

€ 5,00

€ 14,00

€ 52,00

WBTD

Bra Tech Double Shoulders

100% TA

2

S-M-L-XL-XXL

€ 3,00

€ 12,00

€ 39,00

WBTM

Bra Tech Mono Shoulders

100% TA

1

S-M-L-XL-XXL

€ 3,00

€ 12,00

€ 39,00

WCPT

Compression Pants Tech

100% PA

3

S-M-L-XL-XXL

€ 4,50

€ 13,00

€ 76,00

WTS

Shorts Tech

100% PA

3

S-M-L-XL-XXL

€ 4,50

€ 12,00

€ 36,00

WSP

Sweatpants

100% Cotton

1

S-M-L-XL-XXL

€ 7,00

€ 22,00

€ 76,00

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MATERIAL COLOURS

RP

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CAPSULE To launch Nike’s collection for CrossFit we are making a small capsule collection. The shoes would be done in three different models that each have different characteristics and functions according to different functional exercises and movements done in CrossFit. All of the models of both apparel and footwear are made in synthetic materials used specifically for sports, which allow a better balance of the foot and a comfortable feel on the skin.

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One model is especially for lifting and costs slightly more, compared to the other models. The shoes and apparel is all clearly identifiable by the use of strong bright colours, just like Nike has on all of its products, and of course the Swoosh. The compression leggings, allow better blood flow, which consequently gives a better and longer performance to the user, this are typical leggings used by many crossfitters because they have such an aerobic workout

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THE BOX

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DEVELOPMENT The idea In order to launch the new collection of Nike dedicated to CrossFit, we want to open a space where the CrossFit Nike customer can come and find the perfect merchandise for his training, while also giving him the possibility to perfect his workout within the same environment. The Nike Box will become a centre for the community of Crossfitters, who will be able to come and train at the box, with the possibility to be guided by Nike specialists and top athletes in their sessions.

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There will be specialists within the store that can help the clients with their workout, but also follow them up afterwards by giving consultation on nutrition and diets. Instead, people that are only coming only for the merchandise in the store can be guided through the merchandise by the sales advisor who will give advise to the client on which products are more fitting for him based on his physionomy, fitness and personal needs for his workout.

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Realisation The stores will be around 450 square metres, divided into three parts on the inside. The box where the athletes are allowed to train and exercise together with their professional coaches. The store, where the merchandise is sold and there are specialists guiding the clients based on their specific physical needs. A part dedicated to locker rooms, showers and a small stockroom. The boxes are always slightly hidden in order to conserve the idea of the CrossFit community of being slightly isolated.

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The CrossFit community is continuously growing but they are a community which is not very advertised or talked about. They train in Boxes which are not regular gyms and can be found only by informing yourself. To respect this way of training the stores are slightly hidden so they can have a tranquil and authentic workout. The store is separated by a glass wall which is see-through from the store to the inside of the Box. Customers can spectate the WOD, creating an interactive store, where things are always happening.

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LAUNCH To launch this store concept and new brand category we plan to open up a space in London, a city where CrossFit is very much practiced. While the space is in preparation, it would already be made available to a few Nike CrossFit Ambassadors, who will train for the duration of 6 months, in preparation of the World Championships. One of our ambassadors would be Ben Smith, the world’s discussed second best, and biggest rival of Rich Froning Jr, three time world champion and ambassador of Reebok. Ben Smith and his team will be guided both by their private coaches and a team of Nike Fitness and Nutrition specialists, all this in order to put them in the best winning conditions possible. The space would be kept completely secret from the media. The aim is not to let any media channels, press or other athletes know that Nike is having this collaboration with Ben Smith and his team. We want to keep any information from leaking until about one month before.

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In fact one month before the World championships start, Nike would communicate that they will make their first appearance on the CrossFit scene, during the next Games, creating a media Bomb and reaction on all different social media networks. Consequently Nike would post daily Vlogs of the preparation of the Athletes, awaiting the grand moment. Immediately after the Games, the store in London will be opened to Public, together with 3 other stores, which would have been prepared in the meantime, in three other major CrossFit cities throughout Europe. These stores will be completely public for what concerns the store, but in order to create desire within the customer, and stay true to the concept of “isolation” of the client as explained before, only very dedicated Nike clients will be given the opportunity to train within the Box. In the future, when there would be more Nike boxes, and the sport will be more commonly practiced, the Boxes can be made public, and can even become a concept of its own.

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BACK STAGE SUPPORT

ON-STAGE EXPERIENCE

CUSTOMER JOURNEY Unconscious

Semi-professional Athlete

Unsatisfying results

Curious

Awesome Shoes !

Crossfitter

Following CrossFit news

Discovers Nike participation to Games

Informs himself

Visits Nike Box

People

You (crossfitter)

CrossFit community

You keep updated

You go on foot

Things

Press & Media

Box

Online Research

Car, Tram, Bus

People

CrossFit brand

Advertising Manager

Press Office

Sales Associates

Things

Sports Media channels

Web or TV

Web

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The store The Box

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Do i need these?

How will they make me feel?

Decision Time

I love it or I hate it

Checks out the merchandise

Compares with competitors

Decision Time

Take it or leave it

Sales associates & Specialists

Trainers

Sales Associate

CrossFit Nike Club

Social Proof - Online Videos The Nike Box - The CrossFit games

Products

Awareness about performance

Merchandising, Product and Communication Manager

Nike Research Lab Experience

CRM office

Technologies

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CRM tools

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LOCATION

London is the location of the first Nike CrossFit store. Based on a research which shows that the biggest concentration of CrossFit affiliates in Europe is in England, and more specifically London and Manchester. We decided to open our CrossFit store in Stratford Place, a side-street of Bond street, a very central location which is very easy to reach,

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quite prestigious, but at the same time, is not on the main commercial street, so it gives us slightly lower rental and key money costs while being also a bit “hidden” from the craziness of the commercial centre and streets surrounding it. We want it to be slightly “hidden” in order to keep authenticity and tranquility also to the athlete who actually trains within the store.

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In the following years we have planned to open respectively 4, 5 and 6 more stores per year. These would be all going to markets where CrossFit is seeing the biggest growth. Based on data from the CrossFit, Inc. Website, affiliates are mostly concentrated around Italy, Belgium, Amsterdam, Germany and Spain (Madrid). This data is based on the current

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situation in Europe. A part from Europe, CrossFit has its biggest market in America, and it would be a great opportunity for Nike, which is also America’s most important sportswear brand, to open stores within America as well. CrossFit is growing rapidly, so this growth has to be monitored and accordingly Nike can place its Boxes.

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3D MODEL - FRONT

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3D MODEL - BACK

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3D MODEL - STORE

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3D MODEL - BOX

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BUDGET STORE Store:

date

Nike

10/06/16

investment evaluation

INVESTMENTS

On the right side there are the various expenses and capital investments made for the store in London. To note that the key money is slightly lower than other buildings in this area, because we are not on actual Bond Street, but a side street. The store is also on the second floor and doesn’t have any windows Etc, this highly influences the final rent and Key money. The personnel would be made up by average 6 people and 5 trainers, with in average about 9 people in store at the time. The trainers and specialists have a slightly higher salary compared to the full time sales associates.

%

footage in sqm. (net selling area) fixturing cost per sqm. key money franchising fee

450 3000 3.000.000,00

fixturing plant, wiring, pc, lcd... refurbishment Other investments

1.205.000,00 30.000,00 200.000,00

RECURRING EXPENSES

rental fee Landlord contributions phone, energy, heating, insurances Sublet fee other expenses Personnel

PERSONNEL

Sales FullTime (total) Trainers (total) Director Others

Total

Total

10.000,00 509.714,29 1.573.014,29 annual 249.714,29 200.000,00 60.000,00

Total

509.714,29

gross margin %

22,31 0,0% 0,0% 22,31 4,20 93,70 20,0% 50,0% 74,87%

MARGIN CALCULATION

cost of goods discount from wholesale price list further discount net cost of goods multiplier (from wholesale to retail) gross revenue cut price season's sales discount

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4.435.000,00 annual 990.000,00 3.300,00 60.000,00

amortization

20% 20%

600.000,00

15% 20% 8% 8%

180.750,00 6.000,00 16.000,00 802.750,00

nr 6,57 5

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BEP

Income statement Gross retail billing

Net Revenue Cost of goods sold (COGS) Margin on unsold stock

4.364.498,58

Gross Profit Salaries Rental fee Landlord contributions Sublet fee phone, energy, heating, insurances other expenses EBITDA Amortizations Operating income (EBIT) Financial expenses P/L

3.637.082,15 1.150.442,87 0,00 2.486.639,29 509.714,29 990.000,00 3.300,00 0,00 60.000,00 10.000,00 913.625,00 802.750,00 110.875,00 110.875,00 -0,00

BEP

Potential

avg retail price avg wholesale pr.

85,00 21,25

85,00 21,25

pcs to sell/yr pcs to sell/day pcs to sell/season

54.138,49 154,7 27.069,2

80.627,86 230,4 40.313,9

23,54

35,06

UPT bills/day

1,20 128,90

1,30 177,20

Conv rate % Footfall/day

17,90 720,12

17,90 989,97

sales/sqm

8.082,40

12.037,04

ideal stock (units)

2.700,00

2.700,00

10,03

14,93

pcs/day/assoc

Seas. Inv. Turnover

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Potential 100,0% 31,63% 0,0% 68,37% 14,0% 27,2% 0,1% 0,0% 1,6% 0,3% 25,1% 22,1% 3,0% 3,0% -0,0%

6.500.000,00

5.416.666,67 1.713.341,98 0,00 3.703.324,69 509.714,29 990.000,00 3.300,00 0,00 60.000,00 10.000,00 2.130.310,40 802.750,00 1.327.560,40 110.875,00 1.216.685,40

31,6% 0,0% 68,4% 9,4% 18,3% 0,1% 0,0% 1,1% 0,2% 39,3% 14,8% 24,5% 2,0% 22,5%

By looking at the amortizations and the potential results of the store, it is possible to see how the store can reach a financial balance after about 3 years. To reach a potential of 6,5 million revenue, the Nike store should make approximately 177 transactions a day. This should be more than possible considering a conversion rate of 18%, which would mean an average footfall/day of 700 people, very achievable in the area where our store is located.

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BUYING PLAN The buying plan for the Nike store consists of both the woman and man collection for the store in London. It is also taking in account the different subscriptions made by the athletes who are training there to be able to train in the Box. With a retail mark-up of around 4, the average price of the products is around 85 euro. The industrial cost of the garments is quite low, because they are produced in big quantities.

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The three different shoes for man and woman go respectively from size 40 to 45 and from 36 to 41. While generally the collection has the garments in 5 sizes from S to XXL, a part from the compression pants, technical shorts an Sweatpants, which have standardised S-M-L measurements. The collection is rather small because it is a capsule collection made to introduce this new product category of Nike.

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CODE

STYLE

MATERIALS

COLOURS

SIZES

COST

WP

QTY

IN-STORE

RTL

VALUE

MEN MLS

Lifting Shoes

MCSL

Crossfit Shoes Low

MCSH

Crossfit Shoes High

MSAN MSVN MTTT MTAN MTMS MTLS MCPT MST MSP

Swaeter Around Neck Sweater V Neck Tank Top Tech T-Shirt Around Neck T-Shirt Mid Sleeve V Neck T-shirt Long Sleeve Tech Compression Pants Tech Shorts Tech Sweatpants

60% EL 20% PI 20% TA 60% EL 20% PI 20% TA 60% EL 20% PI 20% TA 100% Cotton 100% Cotton 80% PC 20% PI 80% PC 20% PI 80% PC 20% PI 80% PC 20% PI 100% PA 100% PA 100% Cotton

1

40-45

€ 9,00

45,00

1500

End of June

195,00

292.500,00

2

40-45

€ 8,00

40,00

3000

End of June

140,00

420.000,00

2 2 1 2 2 1 1 3 3 1

40-45 S-M-L-XL-XXL S-M-L-XL-XXL S-M-L-XL-XXL S-M-L-XL-XXL S-M-L-XL-XXL S-M-L-XL-XXL S-M-L S-M-L S-M-L

€ € € € € € € € € €

8,00 10,50 10,50 4,00 3,50 3,50 3,50 3,30 3,00 5,50

€ € € € € € € € € €

40,00 24,00 24,00 16,00 14,00 14,00 14,00 13,00 12,00 22,00

2100 1800 1200 3000 6000 3000 4800 4800 6000 3000

End End End End End End End End End End

June June June June June June June June June June

€ € € € € € € € € €

170,00 82,00 82,00 48,00 62,00 52,00 72,00 49,00 56,00 96,00

€ € € € € € € € € €

357.000,00 147.600,00 98.400,00 144.000,00 372.000,00 156.000,00 345.600,00 235.200,00 336.000,00 288.000,00

of of of of of of of of of of

WOMEN

WLS

Lifting Shoes

WCLS

Crossfit Shoes Low

WCSH

Crossfit Shoes High

WSAN WSVN WTTT WTAN WTMS WTLS WBTD WBTM WCPT WTS WSP

Swaeter Around Neck Sweater V Neck Tank Top Tech T-Shirt Around Neck T-Shirt Mid Sleeve V Neck T-shirt Long Sleeve Tech Bra Tech Double Shoulders Bra Tech Mono Shoulders Compression Pants Tech Shorts Tech Sweatpants

MS M3S M6S AS

Monthly Subscription 3 Months Subscription 6 Months Subscription Annual Subscription

60% EL 20% PI 20% TA 60% EL 20% PI 20% TA 60% EL 20% PI 20% TA 100% Cotton 100% Cotton 80% PC 20% PI 80% PC 20% PI 80% PC 20% PI 80% PC 20% PI 100% TA 100% TA 100% PA 100% PA 100% Cotton

1

36-41

€ 9,00

45,00

1500

End of June

195,00

292.500,00

2

36-41

€ 8,00

40,00

3000

End of June

140,00

420.000,00

2 2 1 2 2 1 1 2 1 3 3 1

36-41 S-M-L S-M-L S-M-L S-M-L S-M-L S-M-L S-M-L-XL-XXL S-M-L-XL-XXL S-M-L-XL-XXL S-M-L-XL-XXL S-M-L-XL-XXL

€ € € € € € € € € € € €

€ € € € € € € € € € € €

40,00 24,00 24,00 16,00 14,00 14,00 14,00 12,00 12,00 13,00 12,00 22,00

2100 1800 1200 3000 6000 3000 4800 2400 1200 4800 6000 3000

End End End End End End End End End End End End

€ € € € € € € € € € € €

170,00 67,00 72,00 38,00 42,00 52,00 52,00 39,00 39,00 76,00 36,00 76,00

€ € € € € € € € € € € €

357.000,00 120.600,00 86.400,00 114.000,00 252.000,00 156.000,00 249.600,00 93.600,00 46.800,00 364.800,00 216.000,00 228.000,00

€ € € €

180,00 450,00 900,00 1.900,00

€ € € €

12.600,00 17.100,00 21.600,00 34.200,00

8,00 10,50 10,50 6,00 5,00 5,00 5,00 3,00 3,00 4,50 4,50 7,00

of of of of of of of of of of of of

June June June June June June June June June June June June

SUBSCRIPTIONS / / / /

€ 180,00 € 450,00 € 900,00 € 1.900,00

70 38 24 18

TOTALE €

5.628,00 SOMMA

€ 6.275.100,00 €

Prezzi Tot. K Avg

84000 €

Qty x Gg

Traffic

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22,31 480

Abbonamenti Totali € Prezzo Medio

580,00

85.500,00 74,70 2400

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CONCLUSION Nike is a global company and one of the most important apparel and footwear producers worldwide. They are present on many different platforms simultaneously and have to be careful to manage everything while always staying true to their core DNA and identity. Numbers have shown that CrossFit is a sport to stay, and is certainly growing at very fast rates. As a sport it embodies many of the values that Nike has been communicating for many years to its clients: Group, Competition, Drive for perfection, Need to better yourself, Health, Fitness.

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To become a part of this world is a step that Nike should undertake because it is a phenomenon that will only grow and become more important in the world of sports and fitness. It would allow them to exploit a global, basically unexplored trend which could open up a whole new target market of clients from all over the world. At the same time this could bring life to a very new store concept that Nike can further develop and eventually incorporate in its vast distribution network with a true chain of Nike Boxes.

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Nike Final Project.indd 101

07/06/16 12:56


Nike Final Project.indd 102

07/06/16 12:56


Nike Final Project.indd 103

07/06/16 12:56


Nike Final Project.indd 104

07/06/16 12:56


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